Key takeaways
- Money by itself doesn’t buy happiness or reduce stress
- Happiness comes when your money is aligned with the things that are most important to you
- Feeling in control of your money can make you feel safe and secure
- Money can connect us to the people and things that are important to us and that’s the true path to happiness.
- An ongoing plan for your money can free you from financial worry and stress and help you navigate life with clarity and confidence
Almost everyone has the same thought, especially when the Powerball or Mega Millions jackpot gets high: “If I had that kind of money I’d be happy.”
Can money, whether from a lottery windfall or your own efforts, make you happy? Surprisingly, the answer isn’t an automatic yes. In fact, there are numerous studies that report that money can’t buy you happiness after a certain level of income ($75,000).
Where these reports go wrong is in assuming money is the creator of happiness. It isn’t money alone that makes people happier and it’s not about what that money can buy. It’s how it can be used to support the life you want to live. That support includes three important factors.
Factor 1: Create freedom from worry and stress
The foundation of your happiness and well-being in life is feeling safe and secure. Your financial life is no different. For many, money is a primary cause of stress and worry, which comes from not having a clear plan to help make the best decisions.
Even questions can cause stress. How do I create a budget? How should I tackle debt? What are the best ways to save, invest, and plan for the unexpected and the unknown? How do I protect the things that matter most?
The fear caused by these questions can stop many of us from moving forward. Money may appear to be the culprit, but money is only part of the equation. The lack of a plan for your money can be the real hurdle.
That plan starts with getting financially organized so you can see your entire financial picture, understand all of your options, identify key trade-offs, and make smarter, more informed decisions.
Then take steps such as creating a budget, making a plan to pay off debt, and building an emergency fund. Use insurance and an estate plan to protect what matters most, such as your family and your career. These are the essential elements to freeing yourself from financial worry and stress.
Factor 2: Connect your money with what matters to you
The very foundation of your happiness and well-being in life is feeling safe and secure. Once you’ve achieved financial security and safety, your happiness and well-being is driven by a need to feel connected to the world around you. That connection can be in the form of relationships, your neighborhood or community, your financial goals, and even your beliefs and values.
Keep in mind that money is simply a tool. Like any tool, it can be incredibly empowering and helpful if you know how to use it, and that’s where financial planning comes in.
Financial planning, when done right, will help you explore and clearly define what matters most to you. Financial planning helps you understand what’s important to you, prioritize your goals, identify the necessary trade-offs, and make the best decisions for your situation. If those things are traveling, starting a family, buying your dream home, starting a new job, providing an education for your kids , retiring or anything else, then your money should help you accomplish that.
Factor 3: Put yourself in control of the life you want to live
You might call it autonomy or freedom of choice. One of the biggest determining factors in feeling happier and more fulfilled is to feel that you own your decisions in life, and a lot of that is tied to your decisions about your money. With a solid financial foundation in place, stress and worry behind you, and clarity around your priorities, you put yourself in control of not just your decisions, but your outcomes.
An ongoing and evolving financial plan will ensure you can always see what’s ahead of you. It will highlight all of your options, including ones you didn’t know existed, and provide you with the information you need to make smarter, more informed decisions. Money alone can't buy you happiness but the freedom and power to do what you want can.
